T H E " N A T H A N " C U M M I N G S " F O U N D A T I O N

November 19, 2002

Jonathan G. Katz, Secretary
Securities and Exchange Commission
450 Fifth Street NW, Room 6012
Washington, DC 20549-0609

Re: Comments regarding File Numbers S7-36-02 and S7-38-02

Dear Secretary Katz:

The Nathan Cummings Foundation is deeply committed to democratic values and social justice as part of its mission. The accountability and transparency of corporations are of great concern to us, both programmatically and as an investor. The Foundation s core programs include health, environment, and arts and culture, all areas that are inextricably linked with and affected by corporate conduct. As an endowed institution we take the perspective of a long term investor, one that is concerned with the viability of corporations and our society. This, in turn, leads to a concern about corporate governance and conduct. As a shareholder we have a fiduciary responsibility of oversight.

The Foundation s endowment is currently $354.9 million of which $216.9 million is invested in equity-based securities. Approximately $170.5 million is invested in marketable stocks, domestic and foreign. We directly own $80 million and the balance of $90.5 million is invested in co-mingled funds. We actively vote the proxies on the direct holdings in accordance with our Board-approved proxy voting policy; we do not delegate that fiduciary responsibility to the investment managers or to a voting service.

We are equally interested in and concerned about how the fund managers vote our proxies on our co-mingled funds. The managers could be voting counter to both our investor and programmatic interests without our knowledge or input. Under current rules we are not assured access to the information we need in order to know and evaluate this.

Mutual fund and investment fund managers hold substantial investments that could be a powerful force in advocating for stronger corporate governance and more responsible corporate conduct. However, the industry has an unfortunate history of routinely supporting management, often to the detriment of investors. Recent examples include board-condoned conflicts of interest and permitted accounting irregularities, not to mention scandalous and often self-serving management compensation packages. Although fund managers claim that they are not influenced by conflicts of interest arising from their management of corporate 401(k) plans, without information there is no way to monitor this and its implications.

Disclosure by, and accountability of, fund managers should be on a uniform basis, not determined by individual firm practices or dealt with haphazardly or inconsistently by individual states. SEC-mandated disclosure of proxy voting policies and records will go a long way towards ensuring that investors have the information they need to ascertain the overall performance records of fund managers. Therefore, we strongly support the recommendations set forth by the SEC in the recently proposed rules, File Numbers S7-36-02 and S7-38-02, and congratulate the agency for its forward looking positions on a topic of utmost importance.

Comments Regarding File No. S7-36-02:
Disclosure of Proxy Voting Policies
and Proxy Voting Records by Registered Management

Investment Companies

We support Rule S7-36-02, and feel it is a major step forward in providing transparency for investors. This rule is also consistent with recent SEC moves designed to increase transparency in financial filings and transactions. The SEC is making a clear statement that proxy voting is a fiduciary duty, and should be exercised with the best interests of investors in mind.

It is of increasing concern to some investors that there is no way of knowing how most mutual funds voted on key corporate governance and social issues.

Rule S7-36-02 would better enable shareholders to monitor mutual funds' involvement in corporate governance, compensation, and social policy activity at companies. The proposed amendments would encourage mutual funds to be more actively engaged in the companies they hold, instead of passive institutional investors.

HOW THIS RULE BENEFITS INVESTORS:

• Spotlights conflicts of interests that may exist between fund companies that vote with management at corporations, where they have 401(k) or other business.

• Provides investors with ways of distinguishing fund companies, including identifying those that have strong corporate governance or social responsibility engagement guidelines.

• Forces fund managers to treat the proxy as a client asset.

• Encourages funds to pay attention to critical issues raised for a proxy vote, and vote in the best interest of fund participants.

• Presses mutual funds to take their responsibility for their voting.

RESPONSE TO INDUSTRY ARGUMENTS AGAINST THIS RULE:

• Such disclosures are not costly or cumbersome to mutual fund companies--small funds with fewer resources and revenues have been doing this for years.

• The largest public pension in the world, CalPERS, also discloses its votes and guidelines (since 1999), even though it deals with thousands of companies and proxy votes each year. It does this through web site databases, and hard copy disclosure on request.

• Many mutual funds and large institutional investors already engage companies in serious positive dialogue, yet are able to still vote against management on issues without destroying that relationship.

• Most fund companies already have web sites, and could easily reach the bulk of their investors through web disclosures, which is low-cost.

• Funds should already be internally keeping track of votes, so it's just a matter of converting existing data to new fields for web interface.

Comments Regarding File No.S7-38-02 :
Proxy Voting By Investment Advisers

Under this rule, investment advisers are expected to create policy guidelines to disclose to clients how they will vote on given proxy issues. Advisers are also to keep adequate records of their voting in order to provide transparency to clients when requested. Because investment advisers have voting authority over $12 trillion in assets, in addition to the $7 trillion controlled by mutual funds, and vote these assets on behalf of their clients, methods for disclosing such votes seems a reasonable request. These assets make up the lion's share of the investment market in the U.S., and yet many individuals and institutions entrusting voting rights and obligations to advisers are left in the dark about how their assets are being used to strengthen a company's bottom line. Transparency regarding voting by portfolio managers is paramount in strengthening corporate governance at U.S. companies.

We commend the SEC on its recent efforts to encourage greater disclosure and transparency by mutual funds, including a "plain English" prospectus, and detailed disclosure requirements regarding investment strategies, fees, and risks. The proposed rules concerning disclosure of proxy votes and guidelines is a solid step on the path for true transparency for investors that have indirect control of their assets. Investors feel disempowered and frustrated by the litany of corporate scandals gracing newspapers and television screens. They want to know how their hard-earned monies are being invested for the future, yet are dubious that adequate checks and balances are in place to prevent future "Enrons."

Transparency of action and intent go a long way to alleviate such anxieties. This in turn will help to restore lagging faith in our currently volatile equities markets, and the mutual fund sector.

We look forward to your response concerning our comments.

Sincerely,

Lance E. Lindblom
President and Chief Executive Officer
The Nathan Cummings Foundation

Caroline Williams
Chief Financial and Investment Officer
The Nathan Cummings Foundation

cc: Commissioners Harvey Goldschmid, Roel Campos, Paul Atkins, and Cynthia Glassman